Punjab National Bank, one of the country's largest banks, is mulling an exit from joint ventures with Principal Financial Group in the asset management and insurance broking businesses. Among the new initiatives, the bank plans launch of its own brand of credit cards by October, PNB Chairman and Managing Director K C Chakrabarty tells Prashant K Sahu
Is PNB undertaking any new initiative?
We are aggressively pursuing the aim of providing services at affordable costs. We will also launch our own credit card by October as the joint venture route will take some time.
We are also examining the prospects of our subsidiaries and joint ventures (like PNB Gilts, PNB Housing, Principal PNB Asset Management and Principal PNB Insurance Broking).
Their existence is under examination. We are the silent partner in the asset management JV. I have to take a decision whether to continue or not as Principal is not interested in the life insurance joint venture. We have to look for another partner and may part ways with Principal.
Are you merging subsidiaries with PNB?
This has to be a strategic choice. If a merger creates more shareholder value, it will be done. We have asked PNB Gilts to explore the possibility of merging with PNB.
If they say yes, then it will happen and if they say the purpose will be better served by keeping it independent, then it will not be merged. Currently, we are exploring the possibilities.
Where do you see PNB in 2009-10?
I don't see ourselves overtaking ICICI Bank. I hope PNB will remain number at number three. I don't see a threat from Canara Bank. Only threat may come from HDFC Bank, which is growing at the rate of 40-45 per cent per annum. In terms of customer base and reach, PNB will remain the second largest bank.
Besides business volumes, the number of lives we touch is more important. At present, we have 35 million customers. I am looking for 100 million customers by 2013.
Will you focus on inorganic expansion?
The time has not come for consolidation and that will happen after 2010. Organically, we will be expanding in terms of more intensive penetration in underbanked areas. A new kind of business model and delivery model will take shape to expand customer base.
When will banks cut interest rates?
The finance minister recently told the industry to consider the possibility of cutting interest rates. It may happen next year (2008-09). We have to see what the Reserve Bank of India does on January 29. And cut in rates will not be applicable to banks like our's as the interest rates are already very low.
Your expectations from RBI's monetary policy review?
I don't see any major change in policy. Anyway, one thing is certain, interest rates are not going to increase. They may remain at this level or softened a little. I believe there is a 75 per cent chance of a status quo.
What kind of third quarter performance can we expect?
Nothing extraordinary. It is average and on expected lines of performance. However, the result is better than second quarter result. Wait for the result on January 24.
Where do you want to take PNB globally?
We want international exposure because of three reasons. One, we must have international experience and expertise, so that when the domestic market opens, we would be effectively able to compete with foreign banks.
Second, our corporate clients are going global and so are individuals. We must be available where the customers are going. Third, from a strategic and long-term view. We will not become an international bank in the next two-three years. By 2040-50, India will become the second or third largest economy in the world.
